Hydro and Agder Energi sign LoI to establish a jointly owned company to develop Otra assets

Hydro and Agder Energi have signed a Letter of Intent (LOI) for the possible establishment of a jointly owned company to operate and further develop their combined assets in the Otra River, southern Norway, where Hydro recently acquired the Vigelands Brug hydropower plant.

September 27, 2013

The LoI is conditional on a proposed adjustment of the Industrial Concession Act to enable private entities the possibility to organize an ownership share in a company with liability (ANS/DA). This will enable private entities to take out profit in the form of power rather than restricting it to financial remuneration, which is important to Hydro as a fully integrated aluminium company active throughout the value chain from bauxite to finished products.

Should it materialize, Hydro would own less than one-third of the envisaged jointly owned company (DA), which would satisfy the legal requirements regarding public control and be comparable to Hydro owning one-third in a private limited company.

Hydro acquired the 180 GWh Vigelands Brug hydropower station on the lower Otra River in June, as part of a broader agreement with Rio Tinto Alcan to take over both the high-purity Vigeland Metal Refinery and the on-site "run-on-the-river" power station. Based in southern Norway, Agder Energi is Norway's fourth-largest power producer, with 47 fully owned and part-owned production assets – of which 10 are located on the Otra River.

In addition, Hydro and Agder have signed an agreement regarding project management support. Hydro's Projects unit has provided project management resources and systems to Agder Energi since summer of 2012 to execute the Iveland 2 project. This cooperation has now been extended through a Collaboration Agreement to cover all of Agder Energi's major hydropower projects, lasting for several years.

Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.

No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Updated: October 11, 2016